Senator Joni Ernst, chair of the Senate Committee on Small Business and Entrepreneurship, has called for greater accountability in response to widespread fraud within the Small Business Administration’s (SBA) COVID relief programs. She urged Congress to pass her SBA Fraud Enforcement Extension Act before the statute of limitations expires for key pandemic-era initiatives.
Ernst noted that while programs such as the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) were essential for supporting small businesses during the pandemic, insufficient oversight and a reliance on self-certification contributed to an estimated $200 billion in fraudulent loans.
“Nearly six years ago, the Small Business Administration’s pandemic relief programs provided a much-needed lifeline for small businesses in Iowa and across America.
Millions of small business owners and their employees were saved from closure and mass layoffs thanks to Paycheck Protection Program and Economic Injury Disaster Loan funds awarded by the SBA.
But as we’ve seen time and again, when government funds seem ‘free’ for the taking, bad actors are ready to steal and scam.
But government programs should never be able to be exploited at the American taxpayer’s expense in the first place.
However, the lack of oversight mechanisms in SBA’s COVID relief programs, coupled with the quick disbursement of funds to save shuttered businesses, allowed swindlers to rob taxpayers of $200 billion in pandemic relief loans.
The Pandemic Response Accountability Committee, or PRAC, sounded the alarm years ago on how allowing applicants to self-certify their eligibility increases fraud. Self-certification allows the government to rely on an applicant’s promise that they meet program requirements.
The SBA Office of Inspector General repeatedly echoed their concerns about this system.
Unfortunately for taxpayers, the Biden administration ignored repeated watchdog warnings, allowing blanket forgiveness without additional verification on PPP loans under $150,000 and potentially allowing a large swath of fraud to escape meaningful scrutiny.
Self-certification was known to be a major problem as more pandemic relief programs were created.
Consider the Restaurant Revitalization Fund (RRF) and Shuttered Venue Operators Grant (SVOG) programs.
These opened a menu of fraud for the taking.
In 2024, music artist Chris Brown exploited these awards to the tune of $10 million.
Half of these funds were paid directly to the singer himself.
Additional funds were spent on an $80-thousand-dollar birthday party.
The SBA never should have been running a drive-thru for fraudsters.
However, even though the RRF program had a 20-location limit for franchisees, restaurant chain CoreLife Eatery – with 29 locations – still got served $7.8 million from taxpayers that it never should have been allowed to receive.
But talk about fast fraud made to order, one Oregon dentist – known for illegally distributing pharmaceuticals – used his personal address and fictitious restaurant names in Florida to generate nearly $8 million in RRF payments.
To date, PRAC has diligently helped law enforcement partners expose more than $2.4 billion in estimated fraud loss.
IG Kirk’s recent appointment as PRAC Chair highlights how critical it remains to claw back these funds, especially across SBA programs.
Last July, the SBA OIG flagged an astonishing $544 million of potential improper payments in the SVOG program, yet the Biden administration continued ignoring the problem. Ultimately, officials from the previous administration did not refer a single case to Treasury.
Fraudsters can’t be left off the hook just because time has passed.
Congress must pass my SBA Fraud Enforcement Extension Act to extend statutes of limitations for SVOG and RRF programs and give investigators time they need continue going after crooks.
Without my legislation, as soon as April some of SBA’s COVID programs can no longer be prosecuted.”
Ernst stated that her proposed extension bill has already passed both House committees but is currently awaiting action by full Senate consideration. She called upon Democrats not “to stop blocking this legislation” so there could be “real accountability.”
She also highlighted ongoing efforts by current administration officials: “The SBA is conducting manual reviews of more than 10,000 RRF awards totaling over $3 billion. Just over 1,000 of these awardees did not submit required post-award report documenting how money was spent.” Additional demand letters have been sent regarding another 8,000 awardees involving over $1.2 billion in disbursements; hundreds more demand letters relate specifically SVOG grant recipients who have not responded concerning grants worth over $150 million collectively.
Ernst referenced recent actions taken by Administrator Loeffler suspending over 110,000 California borrowers involved with potentially fraudulent COVID relief totaling upwards $8.5 billion; she also cited investigations uncovering at least $9 billion from state/federal sources—including approximately $400 million PPP loans—in Minnesota alone.
Members sent correspondence earlier this month commending Loeffler’s work addressing these schemes: “I ask unanimous consent enter into record our January 8th letter requesting information from SBA its efforts uncover fraud… Without objection so ordered.”
The Senate Small Business and Entrepreneurship Committee supports informed decision-making related national fiscal priorities through nonpartisan analysis—overseeing components such as federal budget options—and contributes resolutions/reconciliation instructions during congressional budgeting processes since its establishment via Congressional Budget Control Act 1974.
“I look forward hearing our federal watchdog partners today how they are tackling fraud recovering taxpayers’ hard-earned dollars,” Ernst concluded.
